STMP

[Ramsburg]

Profile: Stamps.com, Inc. provides Internet-based postage solutions. Its service allows customers to buy and print United States Postal Service approved postage. The company offers PC Postage service that enables users to print information-based indicia or electronic stamps, directly onto envelopes, plain paper, or labels using ordinary laser or inkjet printers.
Website: http://www.stamps.com
Market Cap: 484M

Trading Idea:
STMP has been showing good numbers for a while:

Earnings Trends:


Revenues Trend:


Yesterday after the last quarter earnings report the stock opened with a big sell off despite the good results, but quickly recovered closing above the open near the high of the day:
Stamps.com Announces Second Quarter 2006 Results  

Yesterday's candle ended to be a powerful hammer, which is a reversal candlestick. The volume was high and 4 times above the average, suggesting this to be the exhaustive end of a mid term bearish trend.
This stock is heavily shorted (20% of the float), and has been probably manipulated to the downside for the last months (down 50% since April), taking it to what we think is a strong oversold price zone. The high short interest on STMP can easily generate an additional buying pressure from covering shorts.





The volume peaks on the charts have lead STMP to new short term trends in the past, so we expect a rebound from these levels at least to the last upside references: 23.50 or 26.

Trading Plan:
We'll Buy SMTP today at or near the open.

Best regards,

[tokyopua]

Seems like this pick is working, and the high volume hammer Ramsbugh mentions from yesterday is being confirmed.

From Steve Nison's book "Japanese Candlesticks Charting Techniques", page 243:

"A high-volume hammer, such as in this chart, decreases the chance for a correction to the hammer's low.  Therefore, one may be more aggressive about buying on the hammer's close if it is an unusually high-volume hammer than one would if the volume didn't give the same foreceful confirmation".

And of course everything else seems to look good from the technicals, MACD trending up, etc.  Good setup and pick, I am in at 20.3

[nullzero]

Nice pick we can use more short term picks with fast gains like this! I dont think the current portfolio strategy of buying and holding for weeks to months is working. The only way to profit is to be on the right side of the market in nasty volatility swings and sell or cover before the market swings on you. Wish I got into STMP this morning would of been a nice quick 3%-5% gain.

[tokyopua]

Nice pick we can use more short term picks with fast gains like this! I dont think the current portfolio strategy of buying and holding for weeks to months is working. The only way to profit is to be on the right side of the market in nasty volatility swings and sell or cover before the market swings on you. Wish I got into STMP this morning would of been a nice quick 3%-5% gain.

You might have a point there nullzero.  The almost 6% gain in a day here is comparable to the gain from the top stock pick in the $1000 contest after a few weeks, lol.  What a tough market these days.  I do know that I probably wont hold this one long term in any case no matter if 3SOF did because it does seem to be a strange business model, selling stamps online, lol.  I am mainly in it because of the technical setup, wanna get in and get out, squeeze it like an orange as David Randolph used to say!

[Ramsburg]

Nice pick we can use more short term picks with fast gains like this! I dont think the current portfolio strategy of buying and holding for weeks to months is working. The only way to profit is to be on the right side of the market in nasty volatility swings and sell or cover before the market swings on you. Wish I got into STMP this morning would of been a nice quick 3%-5% gain.

Nullzero / tokyopa,
You are both right, the market isn't been easily lately; most rallies have a quick end followed by nasty corrections in price below the breakout zones, following our current service concept sometimes its difficult to explore some positions on the best way.
Using the 3SOF guidance only as an indicative tool, some users may get a big advantage than the service itself, since we are prohibited to change plans on the intraday and all our instructions must be made after the intraday market action. So, we are always updating our plan after the candle, and most traders have the option to make decisions «on the» candle.
Personally I'm not a day trader 90% of the time, but in special market conditions (difficult periods like now), this can be a little handy

Update:
Nice start for this trade... the «hammer effect» is working well so far, and SMTP is already above the highs of this downside range. We expect continuation today, and we keep our targets above $23 for short term.
Setting the correct stop for this trade is the most difficult part... We don't want to take any risks after this cool start, so we are going to use a very tight stop, a few ticks bellow the low of the day near our entry price.

Trading Plan:
Hold STMP with a stop @ $19.90

Regards,

[Ramsburg]

Update:
STMP is still holding above $21, consolidating the recent gains, volume has dropped in the last days, but there is no reason to worry about for now. We'll keep the same trading plan.

Trading Plan:
Hold STMP with a stop @ $19.90

Regards,

[Ramsburg]

Update:
Not a good session for STMP today, giving away most of our profits in what we believe it was only a consolidation candle. We are not taking a big risk here, so our stop remains just a little bellow our entry price in case we are wrong.

Trading Plan:
Hold STMP with a stop @ $19.90

Regards,

[Ramsburg]

Position closed at $19.90 (our stop level)

[njshiva]

Stamps.com shares rise on strong results
Reuters - February 16, 2007 1:57 PM ET

BANGALORE, Feb 16 (Reuters) - Stamps.com Inc. (STMP) shares rose over 19 percent, their highest one-day percentage gain in over a year, a day after the Web-based postage provider reported higher-than-expected fourth-quarter profit.

"Really what you have seen today with the move in the stock is you have the law of low expectations... people were not expecting anything good and, in fact, many were expecting it to continue to get worse," Craig-Hallum Capital analyst George Sutton said over the telephone.

In his note to clients, Sutton, who has an "accumulate" rating on the stock, said the third quarter for the company was very disappointing, mainly due to slower online sales.

For the third quarter, the company had reported less-than-expected revenue, which was hurt by some unexpected challenges in subscription revenue collections that had impacted the core business growth.

The company on Thursday said its PhotoStamps product revenue grew 35 percent and contributed a third of its total revenue for the fourth quarter, helped by increased seasonal marketing and strong orders along the holidays.

PhotoStamps allows consumers to turn digital photos, designs or images into valid United States postage.

Los Angeles-based Stamps.com also said its board authorized a $20 million share repurchase. Based on Thursday's stock price, the buyback represents more than 6 percent of its total market capitalization.

First Albany Capital upgraded the stock to "buy" from "neutral" citing a stabilization in billing, share buybacks and the stock's compelling valuation.

Shares of the company rose $2.77 to $17.07 in afternoon trade on the Nasdaq.

STRONG QUARTER

For the fourth quarter, Stamps.com posted earnings of 20 cents a share, including share-based compensation expense, compared with analysts' view of 18 cents a share. Revenue for the quarter grew more than 20 percent to $25 million.

Stamps.com forecast fiscal 2007 earnings, including stock-based compensation expense, of 70 cents to 80 cents a share, on revenue of $90 million to $100 million.

Analysts' consensus view was 74 cents a share, including stock-based compensation, on revenue of $96.3 million, according to Reuters Estimates.
< Return to Previous